September 11 Commission Report - Gnostic Liberation Front

that, excess liquidity quickly built up because we were unable to process all securities and cash
transactions in a normal manner. The increase in the balance sheet went away very quickly, however,
as we returned to normal processing by Friday and handled the backlog over the weekend.” [ Emerging
Stronger from 9/11/01: An Interview with Todd Gibbons, RMA (Risk Management Association)
Journal, The, Dec, 2001]
In fact, none of the BoNY’s systems failed or went non-operational.
“Bank executives argue that some of the criticism has taken on some aspects of urban legend,
especially the notion that the bank was in disarray because the main backup for its computer center in
Lower Manhattan was at another location in Lower Manhattan. The bank says that all of its several
computer centers in Manhattan were always set to revert to centers outside the city in case of
emergency, and they did on Sept. 11.” [Wall St. Lifeline Shakes Off Dust, and Critics; Disruptions Put
Bank of New York to the Test , Saul Hansell with Riva D. Atlas, New York Times, October 6, 2001]
Even more to the point, the Bank’s Fund Transfer operations are located in Utica New
York, and its communication systems remained untouched.
Where the inconsistent reporting gets interesting is that Todd Gibbons of the BoNY
reported an “increase” in the volume of securities on September 11.
“The contingency site muse be able not only to accommodate normal business loads, it must be able to
accommodate extreme business surges, such as we saw in the first day in the equities market. Our
contingency plans had included the ability to handle a great amount of excess capacity; and we were
able to handle the increase in volumes….” [ Emerging Stronger from 9/11/01: An Interview with
Todd Gibbons, RMA (Risk Management Association) Journal, The, Dec, 2001]
However, the overall volumes for the day were 25% less than normal and one third of the
volume or $400 billion came in after normal business hours in very few transactions. As
seen in the chart below, overall transactions for the day were seemingly down even more
significantly than volume, but the transactions that came in after closing were extremely
large, averaging in size in packages of $35million or more. This would be consistent with
a hypothesis that $240 billion of securities were being pushed surreptitiously into the
money supply. Additionally, the conflicting information from the BoNY and Fed suggest
the activity in the bank was different that that being reported to the public.
“August 2001, the value of Fedwire funds transfers averaged more than $1.6 trillion per day, while
banks held about $15 billion on account.11 ….The value of funds sent on September 11 was $1.2
trillion, about three-fourths of the average for the benchmark period. However, unlike volume, the
value of funds sent had returned to normal levels on the twelfth and was then at elevated levels for the
next seven business days.” [Liquidity Effects of the Events of September 11, 2001, James J.
McAndrews and Simon M. Potter, Federal Reserve Bank of New York Economic Policy Review,
November 2002, p.61]
THE SEPTEMBER 11 COMMISSION REPORT Page 376